BILL ANALYSIS                                                                                                                                                                                                    






                                                       Bill No:  AB  
          1074
          
                 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
                       Senator Roderick D. Wright, Chair
                           2013-2014 Regular Session
                                 Staff Analysis

          AB 1074  Author:  Atkins
          As Amended:  June 20, 2013
          Hearing Date:  June 25, 2013
          Consultant:  Art Terzakis

                                     SUBJECT  
                                  Horse Racing

                                   DESCRIPTION
          
          AB 1074 extends the sunset date by one year for the  
          statewide marketing organization that is responsible for  
          marketing and promoting thoroughbred and fair horse racing  
          and also makes adjustments to existing Horse Racing Law to  
          pave the way for the California Horse Racing Board (CHRB)  
          to adjust racing dates in the central and southern zones in  
          order to address the scheduling issues resulting from the  
          impending closure of Hollywood Park Racecourse.   
          Specifically, this measure:

          1)Extends the sunset date on the statewide marketing  
            organization for one year (from January 1, 2014 to  
            January 1, 2015).

          2)Provides that the CHRB may allocate 49 racing weeks per  
            year in the combined central zone and southern zones.

          3)Requires the CHRB, from the weeks available in the  
            combined central and southern zones, to allocate a  
            minimum of seven weeks per year to a thoroughbred racing  
            association to conduct thoroughbred racing at a racetrack  
            that was used to conduct a thoroughbred race meeting in  
            the southern zone prior to 2012.  (Applicable to Del Mar  
            Racetrack for purposes of preserving its traditional  
            racing dates.)

          4)Requires the CHRB, from the weeks available in the  
            combined central and southern zones, to allocate a  




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            minimum of 25 weeks per year to a thoroughbred racing  
            association to conduct thoroughbred racing at a racetrack  
            that was used to conduct a thoroughbred race meeting in  
            the central zone prior to 2012.  (Applicable to Santa  
            Anita Racetrack for purposes of preserving its  
            traditional racing dates.)

          5)Prohibits the CHRB from allocating dates to a  
            thoroughbred association in the southern zone for the  
            purpose of conducting racing during daytime hours if a  
            thoroughbred racing association is conducting racing in  
            the central zone on the same date during daytime hours.

          6)Also, deletes obsolete provisions of existing Horse  
            Racing Law.
           
                                   EXISTING LAW

           Article IV, Section 19(b) of the Constitution of the State  
          of California stipulates that the Legislature may provide  
          for the regulation of horse races and horse race meetings  
          and wagering on the results.  Existing Horse Racing Law  
          provides that the California Horse Racing Board (CHRB)  
          shall regulate the various forms of horse racing authorized  
          in this state.

          Existing law (Business & Professions Code Section  
          19605.73), operative until January 1, 2014, authorizes  
          thoroughbred racing associations, fairs, and the  
          organization responsible for contracting with thoroughbred  
          racing associations and fairs with respect to the conduct  
          of racing meetings, to form a private, statewide marketing  
          organization to market and promote thoroughbred and fair  
          horse racing. If a marketing organization is formed,  
          existing law requires an amount not to exceed 0.25% of the  
          total amount handled by each satellite wagering facility to  
          be distributed to the marketing organization, and imposes  
          certain requirements on the marketing organization,  
          including that the marketing organization annually submit  
          certain information to the CHRB.

          Existing law (Business & Professions Code Section 19530)  
          provides the CHRB with the authority to allocate racing  
          weeks to an applicant pursuant to the provisions of the  
          Horse Racing Law and to specify such racing days, dates,  
          and hours for horse racing meetings as will be in the  




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          public interest.

          Existing law (Business & Professions Code Section 19531)  
          state the CHRB shall make allocations for racing weeks,  
          including simultaneous racing between zones as it deems  
          appropriate.  The maximum number of racing weeks that may  
          be allocated for horse racing other than at fairs, shall be  
          as follows: (a) for thoroughbred racing: 44 weeks per year  
          in the northern zone, 42 weeks per year in the central  
          zone, and seven weeks per year in the southern zone; (b)  
          for harness racing: 25 weeks per year in the northern zone;  
          (c) for quarter horse racing: 25 weeks per year in the  
          northern zone; (d) for harness racing and quarter horse  
          racing: a total of 77 weeks per year in the combined  
          central and southern zones.

          Existing law (Business & Professions Code Section19532)  
          specifies that: (a) any association licensed to conduct  
          thoroughbred racing in the northern zone may receive no  
          more than 35 weeks of that racing and (b) any association  
          licensed to conduct thoroughbred racing in the central zone  
          may receive no more than 17 weeks of that racing, except  
          that any association which conducts a split meeting may  
          receive up to weeks of that racing.  No more than one such  
          split meeting may be licensed in any one year.

          Existing law (Business & Professions Code Section 19549)  
          provides the maximum number of racing weeks that may be  
          allocated to a fair shall be for four weeks each, except  
          under specified conditions.

                                    BACKGROUND
           
           Purpose of AB 1074:   On May 9, 2013, the CHRB was notified  
          that Hollywood Park Land Company, as well as its affiliated  
          racing associations, would not be requesting the CHRB to  
          allocate any 2014 racing dates at Hollywood Park racetrack  
          in Inglewood.  Thus, after 75 years of horse racing, 2013  
          will be the final year of live racing, training and  
          stabling at Hollywood Park - one of America's premier  
          racing and historic racing venues that hosted Seabiscuit  
          and the first Breeders' Cup.  In this regard, the last day  
          of "live" racing at Hollywood Park will be December 22,  
          2013.  The Hollywood Park stable area is expected to close  
          by the end of the year.  Although the closure of Hollywood  
          Park was long expected it did surprise many folks in the  




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          national racing industry.  From an economic point of view,  
          the land now has a higher and better use and the track's  
          260-acre footprint will be turned into 3,000 new housing  
          units, including single-family townhomes and condos; 25  
          acres of parkland, including a 10-acre central park; and a  
          retail and entertainment district, anchored by a movie  
          theatre, office space and a 300-room hotel. 
          It's the second major California racetrack to close since  
          2008 when Bay Meadows racetrack in San Mateo was shuttered  
          after 74 years of racing to make way for a similar  
          development. 

          According to the author's office, this measure is intended  
          to give the CHRB and the racing industry the maximum  
          flexibility to adjust California's racing calendar to meet  
          the reality of Hollywood Park's closure - it grants the  
          CHRB the flexibility to allocate thoroughbred racing dates  
          in the central and southern zones, while preserving the  
          traditional seven weeks of racing at Del Mar and a minimum  
          of 25 weeks of racing at Santa Anita.  This measure would  
          also extend the sunset date on California's statewide horse  
          racing marketing program until 2015.

          As noted above, the racing map in California is divided  
          into three zones: northern, central, and southern. For the  
          purposes of Thoroughbred racing, Santa Anita and Hollywood  
          Park are in the central zone. Del Mar is in the southern  
          zone and Golden Gate Fields is in the northern zone.  This  
          measure combines the central and southern zones for  
          purposes of the allocation of racing dates.

          At its May 23, 2013 meeting the CHRB responded to the  
          closure of Hollywood Park racetrack and allocated racing  
          dates for 2014 and 2015.  Along with the standard fall meet  
          at Santa Anita and the summer meet at Del Mar, the CHRB  
          voted unanimously to award Santa Anita an extended season  
          from December 26, 2013 through July 6, 2014.  The CHRB also  
          allocated a five-week fall meet at Del Mar that would run  
          November 5 through December 7.  Similar dates were assigned  
          for 2015.

          To be specific, the 2014 dates the CHRB settled on are:  
          Santa Anita - December 26, 2013 through July 6; Del Mar -  
          July 16 through September 3; Fairplex Park (LA County Fair)  
          - September 4-23; Santa Anita - September 25 through  
          November 2; and Del Mar - November 5 through December 7.




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          The 2015 dates are: Santa Anita - December 26, 2014 through  
          July 5; Del Mar - July 15 through September 7; Fairplex -  
          September 10- 25; Santa Anita - September 26 through  
          October 25; and Del Mar - October 28 through December 6.   
          The shortened 2015 Fairplex is contingent on the selection  
          of Santa Anita to host the 2015 Breeders' Cup. 
           
          Marketing Program:   SB 27 (Maddy), Chapter 335, Statutes of  
          1998, among its provision, created a private statewide  
          marketing organization for thoroughbred and fair racing  
          that is funded by 0.4 percent of the in-state off-track  
          handle.  The funds generated from this distribution are  
          used to market California horse racing on a statewide  
          basis.  The California Marketing Committee (CMC) is  
          generally responsible for promoting horse racing in the  
          state by developing and implementing a marketing plan that  
          will increase on-track and off-track attendance throughout  
          the state.  

                            PRIOR/RELATED LEGISLATION
           
           SB 1072 (Calderon), Chapter 283, Statutes of 2010.   Among  
          other things, required thoroughbred racing associations and  
          fairs to deduct an additional amount of the total handle on  
          exotic wagering for purse augmentation; authorized the CHRB  
          to license entities to operate "exchange wagering" systems;  
          required each exchange wagering licensee to annually  
          distribute a specified amount of exchange wagering revenue  
          to the existing jockey health and benefit welfare fund;  
          authorized the thoroughbred racing industry to use monies  
          from horse racing wagering pools to promote the Breeders'  
          Cup; and, extended the sunset date on the statewide  
          marketing program by 3-years.

           SB 766 (Negrete McLeod), Chapter 766, Statutes of 2009.     
          Authorized the CHRB to shift money around from various  
          funds, including the marketing funds, which are in surplus,  
          to others that are in deficit, such as the Vanning and  
          Stabling Account. 
           
           AB 1736 (Governmental Organization), Chapter 444, Statutes  
          of 2007.   Among other things, extended the sunset on  
          provisions to enable racing associations and fairs to fund  
          taking part in the statewide horse racing marketing  
          program.  




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           AB 2164 (Plescia), Chapter 80, Statutes of 2004.   Extended  
          the sunset on provisions to enable racing associations and  
          fairs to fund taking part in the statewide horse racing  
          marketing program to 2006. 

           AB 2931 (Horton), Chapter 922, Statutes of 2002.    
          Authorized the racing associations to use funds earmarked  
          for the CMC for use in developing a program to off-set  
          workers' compensation rates for horse trainers in the  
          state.  
           
           SB 27 (Maddy), Chapter 335, Statutes of 1998.   Among other  
          things, granted major license fee relief ($40 million  
          annually) and limited out-of-state full-card simulcasting.   
          Also, created the CMC that is funded by 0.4 percent of the  
          in-state off-track handle. 
           
          SB 103 (Maddy), Chapter 10, Statutes of 1998.    Provided  
          for California's involvement in the NTRA by permitting  
          thoroughbred owners to (pay to) take part in a national  
          marketing program to increase interest in horse racing. 

           SUPPORT:   As of June 21, 2013:

          California Thoroughbred Breeders Association, Del Mar  
          Thoroughbred Club, Oak Tree Racing Association,  
          Thoroughbred Owners of California and Del Mar Fairgrounds

           OPPOSE:   None on file as of June 21, 2013

           FISCAL COMMITTEE:   Senate Appropriations Committee
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